Budget Reaction of MCC Chamber of Commerce & Industry

Shri Deepak Jalan, Sr. Vice President, MCC Chamber of Commerce & Industry says that the Union Budget for 2012-13 is on expected lines, but a great opportunity to infuse dynamism and growth elements into sagging economy has been lost. Across-the- board increase in Service Tax and Central Excise by 2 p.c. was expected, so also the focus on larger allocation for agricultural credit, containing fiscal deficit, additional benefits to the MSMEs and the textile sector. The Finance Minister has also taken a few steps to pep up investment-environment, infrastructure-growth and check on black money and tax avoidance.

Shri Jalan also feels that increase in Service Tax along with its levy on a ‘Negative List’ basis, coupled with the rise in Central Excise duty will certainly lead to higher costs of products and Services which in turn will fuel the inflationary forces in the economy. Further, the fiscal deficit target of 5.1 p.c. will be difficult to maintain in the context of rising inflation in the economy and it might cross 6 p.c. of GDP which is alarming.

The Budget commitment to fully implement the Food Security Act involving a subsidy of over 1 lac crore might upset the fiscal deficit target. It doesnot also provide for any incentives to encourage capital formation which has declined to 29 p.c. of GDP from around 33 p.c. in 2007-08.